SBA Licenses New $130 Million Investment Fund

A new fund will focus exclusively on providing capital to Michigan businesses.

The InvestMichigan! Mezzanine Fund will provide up to $130 million of investment capital over the next five years to high-growth businesses throughout Michigan.

The U.S. Small Business Administration will provide $80 million at no cost to the taxpayers, SBA Administrator Karen Mills in a press call Tuesday.

The fund will focus on underserved markets or in sectors that have been defined as national priorities, the SBA said. Impact investments can target small businesses located in or employing residents of low or moderate income areas or economically distressed areas.

Sector-based, targeting industry sectors that the SBA has identified as national priorities are also eligible to participate in the fund. Currently only clean energy and education have been identified as priority sectors, the agency said.

Businesses that have a “significant presence” in Michigan or are in the process of expanding their operations in the state are also eligible.

The SBA said it will partner with Michigan Growth Capital Partners L.P., an investment partnership whose anchor investor is the State of Michigan Retirement Systems, and the Dow Chemical Co. to provide up to $130 million of investment capital over the next five years to high-growth businesses throughout the state.

Credit Suisse’s Customized Fund Investment Group structured the InvestMichigan! Mezzanine Fund and will manage the fund in partnership with Beringea, a Michigan-based investment manager.

Of the total funding, Dow will provide $15 million, Michigan Growth Capital Partners will provide $35 million, and the SBA will provide $80 million, which must be repaid, the agency said.

Mills said the fund was started in Michigan because of the high unemployment rate and 90% of the state’s counties qualify as distressed under federal and state guidelines.